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How to Start a Profitable In-House Restaurant Food Delivery Service


Streamline your restaurant business by starting an in-house food delivery service. Learn the key steps to implement a profitable delivery model from our expert guide.

The UK food delivery market has been growing steadily over the past few years since the COVID-19 lockdowns. Even though dine-in restaurants are open again, people will likely continue to prefer ordering food online for convenience. In the long term, consumers are expected to choose the ease of online ordering over dining in at restaurants. 

The reopening of dine-in restaurants hasn't changed people's preference for the convenience of ordering food online. Statistica reported that online food delivery revenue will reach $48.21bn in 2024 and double by 2029.

However, using third-party food delivery services such as Uber Eats or Deliveroo means restaurants lose between 15-30% of their revenue. Meanwhile, in-house delivery can guarantee both the quality of the product and keep revenues high for restaurant owners and local restaurants.

Models like ghost kitchens or in-house fleets, for instance, can prove extremely profitable. Within the following pages, we will give you a step-by-step guide on how you can start your own in-house restaurant food delivery service based on these models. So, let's get started.

Picking the Right In-house Delivery Model

The first step in the process of setting up an in-house restaurant delivery service should be to identify the food delivery model that best fits your business requirements. Some of the possible delivery options include the following.

Pure In-house Food Delivery

The pure in-house food delivery business model means implementing your own online ordering system, hiring your own delivery drivers, and even leasing delivery vehicles, all by yourself. This provides maximum branding and control, but significant investments are necessary for staffing and managing a fleet. In this case, businesses can also use a hybrid approach, such as in-house delivery during non-peak hours and third-party services when you’re super busy. Read our latest blog on why you need an online ordering system for your restaurant for more information.

Hybrid Model

Many small businesses choose to implement a hybrid system: use in-house drivers during non-peak hours and independent contractors during peak times. For some, it is also feasible to operate under a merchant home delivery model. So you’ll receive online orders via third-party food delivery apps and deliver them with the help of in-house delivery drivers. Dominos is a good example of this. 

Ghost Kitchens

Another trend is the delivery-only restaurant, AKA the Ghost Kitchen, meaning the restaurant doesn’t offer on-site dining facilities. Instead, it has a dedicated production kitchen only to fulfil online delivery orders. It's the best model for a small business running from home wanting to establish their brand.

Third-Party Delivery Services

Finally, some restaurants prefer to outsource delivery logistics completely by collaborating with local courier services while keeping the online ordering system and food preparation in their own hands. This way, restaurants do lose control over logistics, but they gain extra business from thirst part platforms and their marketing efforts. Turnkey services offered by companies like Deliverect integrate online ordering across multiple platforms into restaurants' existing POS systems.

Step-by-Step Guide To Starting In-house Delivery

Here’s a comprehensive, step-by-step guide to help you start a food delivery service.

Revamp Your Business Plan

Delivering food as a restaurant requires planing. Once you’ve decided to integrate online food delivery services into your operations, you must make it official by changing your business plan. Create or replace an existing section within your business plan for the delivery vertical. 

Address the type of meal delivery services you intend to pursue and elaborate a plan based on your target customer demographics, projected cuisine type, and estimated profits to determine the economics of operating an in-house fleet versus using an outsourced delivery solution.

Develop a new mission statement that speaks to your company’s overall outlook on the delivery business. Analyse industry peers and determine how you can improve your competitive positioning in the target market.

Optimise Your Menu

Not every dish travels well, so smarten up your food delivery menu to include your top seller prepared meals and any others you think will withstand delivery without compromising the dish’s quality. Work with your chefs to test different packaging methods that preserve temperature, texture, and flavour. 

Set your delivery pricing strategy by accounting for packaging costs and service fees, as well as considering whether to absorb delivery charges or pass them on to customers.

Equip Your Commercial Kitchen

Remodel a separate section of your commercial kitchen for preparing, cooking, and packing delivery orders. Smart shelving, hot-holding equipment, packaging stations, and organisation are essential for an efficient and hygienic flow of delivery. Educate staff on food safety SOPs, including labelling, distribution, and handling, as well as communication with the delivery team.

Build Your Delivery Fleet

An in-house delivery fleet will require you to buy or lease vehicle types that suit the radius of delivery and the order volumes. Find and hire delivery drivers with a clean driving record, people skills, and the capability to use navigation apps. You may also need to invest in technology that enables effective routing, order tracking, and proof of delivery. 

Set Up Online Ordering

Given that customers expect a seamless ordering system nowadays don’t skimp when building a website and native app. Users should be able to comfortably navigate your menu, customise their orders, schedule deliveries, and make secure payments. You can even buy a pre-built online system, such as 3S POS Online Ordering, to streamline acquisition and set-up.

Integrate the system directly with your POS through APIs; that way, it will be easier to receive payments and keep track of orders. If your existing POS system does not support the integration of new modules, consider investing in a new, more modern point-of-sale system, such as 3S POS. 

Implement Your Marketing Strategy

Now, it's time to kickstart your marketing strategy. Spread the word about the launch of your online food delivery service far and wide across social media, email marketing campaigns, and local advertising platforms. This will help generate hype and attract new customers. Establish partnerships with other businesses for cross-promotion.

Use SEO, such as locally targeted website content, online listings, and local citations, to boost your visibility in search engine results. Use a strong loyalty programme to foster good relationships with new and existing customers.

Top Tip: Put a promotion in place, such as 20% off your first order, for customers who use your delivery service. This will entice people to try out your new system. Everyone loves a promo!

Track Key Metrics

After a successful launch, fire up your analytics tools to monitor operational efficiency indicators, such as average delivery times, most ordered menu items, and busiest hours, then adjust your services accordingly. Also, don't forget to track your order volumes, profitability per order, customer ratings and feedback, drivers’ on-time performance, and more as the delivery operation ramps up. This data-driven approach will allow you to continuously optimise and expand the in-house delivery business.

Risks & Rewards of In-House Food Delivery

While the potential upsides of running an in-house delivery service are significant, restaurateurs must also think about the inherent risks and challenges involved. 

On one hand, it provides you with an unparalleled level of control over branding, customer experience, and profit margins. It also helps you avoid third-party food delivery platform commissions, which, in some cases, can go as high as 30%. Additionally, it can help you unlock new revenue streams and opportunities like catering, subscriptions, and even launching multiple virtual-only brands optimised for delivery. 

This control, however, doesn’t come cheap; startup costs for delivery vehicles, insurance, technology, and marketing can quickly hit tens of thousands of pounds. Logistical management presents its own array of operational challenges, from routing and labour scheduling to maintaining food quality despite the risks of temperature abuse during transit. Legal liability also increases with the threat of potential accidents, health code violations, or customer frustration. 

The in-house food delivery model makes cash flow management exponentially more difficult as compared to third-party food delivery services. Slow payments, low demand cycles, and the expense of a dedicated delivery team all have the potential to significantly impact your working capital.

However, owning the entire customer experience presents opportunities for differentiation. Restaurants can amaze diners with exceptional service, special packaging, and a heightened focus on quality, which results in higher customer loyalty. With in-house delivery services, you can also relieve consumers of paying high third-party delivery fees, which often cause frustration among consumers and stop them from placing an online order. Besides, capturing first-party data enables hyper-targeted marketing and building a devoted customer base.

Closing Thoughts

Most restaurants start with a hybrid model and then expand to a fully in-house delivery model to develop further. Ensuring thorough planning, rigorous standard operating procedures and an unwavering focus on customer satisfaction are all paramount for mitigating the risks and realising the rewards of in-house food delivery operations.

In conclusion, the food delivery industry is booming and likely to grow further in the near future.

For almost 20 years, 3S POS has offered one of the most flexible EPOS systems to international brands such as Caffe Concerto, Maroush, Comptoir Libanais, Pepe’s Piri Piri, GDK and thousands more delighted customers.

If you are looking for an EPOS system for restaurants that will not just help you accept payments but includes inventory management, loyalty programs, and much more, speak to our sales for a free demo.

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